Amid bumper crop, families could get PB&J break

ATLANTA (AP) -- Choosy moms and dads may be packing more PB&J in lunches this winter, when the cost of a jar of Jif or Skippy is expected to fall even as other grocery prices rise.

Peanut butter prices soared last year after a drought and high heat in the Southeast, where most peanuts are grown. This year, that region got a break while farmers in most of the rest of the United State suffered huge losses in the widest drought in decades.

Farmers are now expected to bring in two-thirds more peanuts than they did in 2011. That could mean a price drop at the grocery store.

"After last year's small crop, we saw peanut butter prices on average rise 30 percent or more," said Patrick Archer, president of the American Peanut Council. "With this year's excellent crop, the supply and demand should come back into balance and peanut butter prices should come back to a more normal level at the retail level."

A 10 percent decrease on a $3 jar of peanut butter, for example, would translate to a savings of 30 cents. That may seem nominal, but the impact is greater for food banks and other big buyers.

Bill Bolling, founder and executive director of the Atlanta Community Food Bank, said food banks usually must buy protein-rich items like peanut butter, beans and meat. His organization buys anywhere from 200,000 to 400,000 pounds of peanut butter each year, depending on the price.

"If costs go down 10 percent or 20 percent, we can buy that much more product," Bolling said. A big supply also increases the possibility of donations -- for instance, a company may donate large shipments if there is a mistake in packaging or a huge surplus, he said.

Bolling said peanut butter is one of the most popular products at the food bank because children like it, it's high in protein and it has a long shelf life.

Peanuts are already considered a staple of the American diet, with the average U.S. consumer eating about 6 pounds of peanut butter and other peanut products each year, according to estimates from the American Peanut Council, an industry trade group. But peanut butter could become even more attractive as strong global demand, high prices for livestock feed and a huge sell-off of cattle and other animals in drought keep pushing up meat prices.

U.S. farmers are expected to produce more than 3 million tons of peanuts in 2012, according to figures released Oct. 11 by the U.S. Department of Agriculture. That's a 66 percent increase over 2011, when growers produced more than 1.8 million tons.

Experts say several factors created the perfect conditions for a banner year. High peanut prices after last year's small crop encouraged farmers to plant more; USDA figures show acreage was up nearly 50 percent in 2012 compared with a year earlier. Farmers in the Southeast also got a break in the weather. Spring came early, allowing them to plant sooner. Temperatures were generally milder, and thunderstorms in August and September provided some much-needed relief in the weeks before farmers began the peanut harvest, which is currently in full swing.

Experts also say a peanut variety developed in recent years is boosting the record yields, in part because it tends to be resistant to disease.

"In this south Georgia area, we probably had as good a growing season as I can remember in a long time, and maybe in my 26 years (as executive director)," said Don Koehler, executive director of the Georgia Peanut Commission.

Georgia by far produces more peanuts than any other state, though the legumes are grown in sandy soil from Mississippi to Florida and north to the Carolinas.

Most farmers sell a portion of their crop at a set price before they even plant, so they'll get the higher prices in effect last year for some of their product. Koehler said that should offset any losses they'll take on peanuts sold at today's lower prices, although farmers who didn't sell much in advance may have a tougher time.

"If they can hold some a little bit later, it may be that the market goes back up some point out in the future," he said.

Still, most farmers are grateful for a decent harvest after seeing some plants dry up in dusty ground last year and in some cases having to altogether abandon some acres, said Armond Morris, who farms 1,000 acres of peanuts in south Georgia's Irwin County and serves as chairman of the Georgia Peanut Commission.

"For the last two or three years, we had had some really tough years," Morris said. "A lot of things have really fallen into place (this year)."